Hung parliament leaves IT industry uncertain

The IT industry has been left with an uncertain future after the General Election resulted in Britain's first hung parliament in decades.

Conservative leader David Cameron insists Gordon Brown's Labour party has "lost its mandate to govern", but without a clear Tory majority, efforts to form a coalition with the Liberal Democrats continue.

Any coalition government, or a minority administration, could add not just to uncertainty affecting the country generally, but the IT industry in particular.

In the run up to the election all the parties insisted on major cuts in public sector spending with IT-driven efficiencies being counted on to protect service levels. Some existing projects are also likely to be axed -- including the expensive and controversial ID card scheme. Shares in outsourcing companies have fallen heavilly since the result was declared.

The Conservatives used the election to reiterate existing plans -- to freeze major new IT spending, and to make changes in government procurement by opening the market to smaller suppliers.

The Liberal Democrats called for improved government IT procurement, and encouraged greater use of cloud computing and open-source software.

Labour, which could yet lead an administration, made a particular focus of what it calls Digital Britain, pledging to support the IT industry including startup companies.

This year's Budget promised some support for new workers, as Alistair Darling, the chancellor, announced funding for 20,000 higher education training places in science, technology, engineering and mathematics subjects, and more support for small businesses and entrepreneurs. The rollout of high-speed broadband across the country is also being touted by Labour as a way to boost industry.

Both Labour and the Liberal Democrats have insisted they would create hundreds of thousands of jobs in the green technology industry. The Conservatives, conversely, have made fewer specific announcements on the environment and related jobs.

In recent months, IT workers across the UK on public and private sector contracts have protested at difficult conditions, pay freezes and the limiting of their retirement benefits. A number of workers have even gone on high profile strikes, with HP and Fujitsu seeing major industrial action on key contracts.

All three of the large parties recognised the changing online habits of voters, some buying Google keywords to gain traction on the web. And after it emerged that the Conservatives had reportedly been sponsoring thousands of Google AdWords for more than three years, Labour's former deputy leader John Prescott appeared on Twitter calling for Labour activists to click on the Conservative Party's Google ads in an attempt to rack up costs for the Tories.

But Labour and the Conservatives faced controversy last month as they swept the new Digital Economy Bill into law, meaning users face being cut off if they access pirated material. While the Bill met support from creative industries and copyright holders, vocal opponents -- including broadband firm Talk Talk and the Open Rights Group -- said it limited free speech and imposed heavy burdens on internet service providers.

There has been much talk about how the ever-growing public sector deficit will be tackled -- resulting in pledges to cut huge costs from government IT. Labour has insisted it will cut £3.2 billion (US$4.7 billion) from IT spending by 2012, as part of a £15 billion operational efficiency review.

Socitm, the industry body for local government IT managers, lambasted Labour's IT strategy, accusing the government of focusing on cutting costs instead of improving services.

Conversely, the Tories say Labour's planned cuts are not ambitious enough. They brought in former Labour efficiency adviser Sir Peter Gershon, who calculated that a further £12 billion could be cut, including £4 billion from public sector IT and £3 billion from contract renegotiation.

The Conservatives also say they would cap projects at £100 million. But no definition has been given so far on how having smaller IT projects would deliver definitive improvements.

The government's often-chequered procurement of IT has become a clear political issue. With the £12.7 billion NHS National Programme for IT hitting major contractual problems in recent weeks, the government is scrambling to find a solution. Health minister Mike O'Brien has lavished praise on the scheme, but the Conservatives and Liberal Democrats have taken a different stance, saying centralised patient records needed to be scrapped.

Other IT-focused projects have also been met with political controversy. Last year the government backtracked on the £5 billion ID cards scheme, saying the cards will no longer be compulsory, but it pressed ahead with a biometric passport database that will store the same data. The Tories and Lib Dems have both vowed to entirely scrap even voluntary ID cards.

There is also the issue of offshoring public sector technology work. A number of projects have been sent abroad in recent months, including a £600 million pensions processing deal with Tata Consultancy Services in India. The company already runs the new child support and maintenance scheme systems.

Tory advisers have suggested the party outsource back office functions if it wins the election -- according to public sector website Kable -- and some of this could go offshore. Such moves remain controversial.

Any party to win the election would likely focus on the use of shared services to cut costs. But successful examples remain scarce, so far, and the move has been described as a "massive" culture change.

Whichever party wins, after some early announcements it is likely to take some time before concrete changes are made. And, of course, whether all the pledges are met is another question.

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